A new report to Vermont lawmakers raises concerns about the costs of implementing Green Mountain Care, a proposed universal single-payer health care system for the state.

Earlier this year, lawmakers mandated a report from Vermont’s Joint Fiscal Office, the Department of Banking, Insurance, and Securities, and Health Care Administration to provide an “estimate of the costs of Vermont’s current health care system compared to the costs of a reformed health care system upon completion of Green Mountain Care and the additional provisions of this act.” The report, “Costs of Vermont’s Health Care System Comparison of Baseline and Reformed System,” was issued in November. According to its projections, Green Mountain Care would cost as much as $9.5 billion a year.

Costly New Government Bureaucracy

The new projection does represent a savings of $500 million compared to the status quo, according to projections. If Vermont continues on its current health care path, “Vermont health care spending will more than double from 2009 to 2019, from $4.7 billion to $10 billion,” the report states. But Darcie Johnston, founder of the free-market-oriented group Vermonters for Health Care Freedom, says that while health care costs will increase without reform, the choice is not between a universal system and the status quo.

“No one is suggesting doing nothing. But I expect a new government bureaucracy will be even more costly than predicted by this report,” Johnston said.

Johnston says excessive government involvement in the marketplace is the reason health care costs have risen so drastically already.

“Because Vermont has mandated health reforms for the last 20 plus years, that has only resulted in driving up the cost on health insurance, not reducing costs,” Johnston said.

Expect Lower Savings, Higher Costs

John McClaughry, president of the Ethan Allen Institute, a public policy think tank in Vermont, is also troubled by the prospects of Green Mountain Care.

“The state’s cost figures are based on a roughly 7 percent annual increase in health care costs with no new program, and a much lower increase—yielding ‘savings’—under Green Mountain Care, which will provide services to thousands more who are now uninsured,” McClaughry said.

Murky Description of Savings

The report provides suggested policy reforms to address the rising costs to the taxpayers of health care, which it claims if implemented can create savings starting in 2014. The suggested policies are in areas such as “administrative simplification and streamlining; benefits; changes in clinical processes, including care management, malpractice reform, organizational reform, payment reform, and quality improvement; planning and capital investment management; and prevention and public health.”

The report estimates by 2020, budget savings from these steps will range from $553 million (5.5 percent) to $1.8 billion (18.3 percent of total spending).

McClaughry notes the definition of these so-called savings are quite vague, and he says it’s unrealistic to expect these claims to produce at the level suggested by the report.

“The state is quite vague about exactly how these ‘savings’ will be made to appear. ‘Efficiency,’ ‘fraud control,’ and especially ‘payment reform’ appear to be the key factors, but many suspect the state can hit its savings targets only by Quebec single-payer methods: fewer providers, less equipment, and lower reimbursement,” McClaughry said.

Eliminating Existing Insurers

Eliminating health insurance companies under a single payer system is not the answer, says Johnston, because “it drives up cost, limits choice, and forces individuals out of investing in health insurance.”

“The largest tax increase in Vermont history, which this system will require, will destroy the Vermont economy and job growth,” Johnston said. “Green Mountain Care is projected to create a $2 billion deficit combined over five years.”

McClaughry warns against eliminating insurance companies, saying they provide an important service.

Eliminating insurance companies and implementing of a single-payer system is not the only option, McClaughry notes.

“The Ethan Allen Institute has promoted a consumer-directed, market-oriented insurance program since 1994, but Vermont’s teeming left wing declares that ‘health care is a human right’ and demands that taxpayers be required to pay for ‘appropriate care at the appropriate time in the appropriate setting.’ They won’t rest until health insurance companies are extinguished,” McClaughry said.

Johnston agrees there are other paths.

“The other options include developing a vibrant exchange, reforming medical malpractice, expanding BluePrint for Health and other healthy living incentives, and additional free market reforms similar to what the Maine legislature passed this past spring,” Johnston said.

Vermont lawmakers will wait to make their final decision early in 2012, after the election. A series of public meetings are being held in November and December of 2011 in an effort to judge the public’s response to the proposals. McClaughry hopes lawmakers will reconsider the idea.